I.

Absolute and Conditional Sales

1. DIGNOS vs CA, 158 SCRA 378
G.R.No.L-59266, Feb. 29, 1988
Petitioners: Silvestre Dignos and Isabel Lumungsod
Respondents: CA and Atilano G. Jabil
FACTS:
- The Dignos spouses were owners of a parcel of land in Opon, Lapu-Lapu City.
- June 7, 1965: Dignos spouses sold the said parcel of land to Atilano J. Jabil for the
sum of P28,000.00, payable in two installments,
- November 25, 1965: the Dignos spouses sold the same land in favor of Luciano
Cabigas and Jovita L. De Cabigas for the price of P35,000.00.
- A deed of absolute sale was executed in favour of the Cabigas spouses, and
registered thereafter.
- Plaintiff-appellant Atilano Jabil tendered the payment of the balance of the
purchase price of the land to the spouses Dignos, but the latter refused to accept
the same
- Jabil discovered the second sale made by the Dignos to the Cabigases
- Jabil instituted the present suit
- CFI Cebu rendered judgement against the defendants therein, declaring the deed
of sales between the Dignoses and the Cabigases as null and ab initio. (parties
ordered to pay back, including expenses for fence)
- CA affirmed the lower courts decision (except expenses for fence)
- The defendants therein filed a MOR, but was denied for lack of merit.
- Hence, this petition
ISSUE:
1. Whether or not there was an absolute contract of sale.
HELD: Yes.
- A the elements of a valid contract of sale under Article 1458 of the Civil Code, are
present, such as:
o (1) consent or meeting of the minds;
o (2) determinate subject matter; and
o (3)price certain in money or its equivalent.
- That a deed of sale is absolute in nature although denominated as a "Deed of
Conditional Sale" where nowhere in the contract in question is a proviso or
stipulation to the effect that title to the property sold is reserved in the vendor until
full payment of the purchase price, nor is there a stipulation giving the vendor the
right to unilaterally rescind the contract the moment the vendee fails to pay within
a fixed period.
- A careful examination of the contract shows that there is no such stipulation
reserving the title of the property on the vendors nor does it give them the right to
unilaterally rescind the contract upon non-payment of the balance thereof within a
fixed period.
- In addition, Article 1477 of the same Code provides that:
o "The ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery thereof."
- While it may be conceded that there was no constructive delivery of the land sold
in the case at bar, as subject Deed of Sale is a private instrument, it is beyond
question that there was actual delivery thereof.
- As found by the trial court, the Dignos spouses delivered the possession of the land
in question to Jabil as early as March 27,1965 so that the latter constructed
thereon Sally's Beach Resort also known as Jabil's Beach Resort in March, 1965;
Mactan White Beach Resort on January 15, J 966 and Bevirlyn's Beach Resort on
September 1, 1965. Such facts were admitted by petitioner spouses.

II. Object of a Contract of Sale

2. ARTATES and POJAS vs. URBI, et. al., 37 SCRA 395
G.R.No.L-29421, Jan. 30, 1971
Plaintiffs-appellants: Lino Artates and Manuela Pojas
Defendants-appellees: Urbi, Soliven, Provincial Sheriff of Cagayan, Deputy Register of
Deeds of Cagayan
FACTS:
- Sept 23, 1952: A homestead patent was issued to appellants Lino Artates and
Manuela Poja.
- June 2, 1962: To satisfy a judgement against Lino Artates for inflicting physical
injuries upon Daniel Urbi, the Provincial Sheriff of Cagayan conducted a public sale
of the property in question.
- In the execution sale, the property was sold to Daniel Urbi, being the only bidder.
- The appellants Artates and Pojas alleged that the sale violated the provision of
Public Land Law exempting said property from execution for any "debt contracted
within 5 years from date of the issuance of the patent.
- Appellants prayed that the execution sale of the land to the defendant Urbi, as well
as the deed of sale executed by the latter in favor of the defendant Soliven be
declared null and void.
- The lower court ruled in favor of the appellants, declaring the deed of sale null and
void.
- Hence, the present appeal
ISSUE:
- Whether the decision of the Court of First Instance of Cagayan involving the public
sale of a homestead to satisfy a civil judgment against the grantee is vaild
HELD: The execution sale conducted was considered NULL and VOID.
- The judgment rendered was in violation of Section 118 of the Public Land law
(Commonwealth Act 141).
- Section 118 of the Public Land law (Commonwealth Act 141) provides as follows:
o SEC. 118. Except in favor of the Government or any of its branches, units, or
institution, or legally constituted banking corporations, lands acquired under
free patent or homestead provisions shall not be subject to encumbrance or
alienation from the date of the approval of the application and for a term of
FIVE YEARS from and after the date of issuance of the patent or grant, nor
shall they become liable to the satisfaction of any debt contracted prior to
the expiration of said period, but the improvements or crops on the land may
be mortgaged or pledged to qualified persons, associations or corporations
3. HEIRS OF ENRIQUE ZAMBALES vs CA and NIN BAY MINING CORP., 120 SCRA
897
G.R.No.L-54070, Feb 28, 1983
Petitioners: Heirs of Enrique Zambales and Joaquina Zambales
Respondents: CA, Nin Bay Mining Corp, Angela C. Preysler and Joaquin B. Preysler
FACTS:
- The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are
illiterate, were the homestead patentees of a parcel of land in the Municipality of
Del Pilar, Roxas.
- They claimed in November 1956 that respondent Nin Bay Mining Corporation
(Corporation) had removed silica sand from their land and destroyed the plants
and other improvements thereon.
- Said Corporation denied to have done so.
- October 29, 1959: A Compromise Agreement was entered into by the Corporation
and the Zambaleses, who were duly assisted by their counsel, Atty. Perfecto delos
Reyes.
- The Compromise Agreement states, among others, that the Zambaleses are giving
the Corporation full power and authority to sell, transfer and convey on September
10, 1960 or at any time thereafter the whole or any part of herein subject property.
- September 10, 1960: the Corporation sold the disputed property to Joaquin B.
Preysler for the sum of P8,923.70 fixed in the Compromise Agreement.

December 6, 1969, or ten (10) years after the Trial Court's Decision based on the
Compromise Agreement, and nine (9) years after the sale to Preysler, the
Zambaleses filed a civil action in the CFI of Palawan for "Annulment of a Deed of
Sale with Recovery of Possession and Ownership with Damages, alleging that Atty.
de los Reyes and the Corporation induced them through fraud, deceit and
manipulation to sign the Compromise Agreement.
- The trial court declared the deed of sale executed between Preysler and the
Corporation as null and void
- CA reversed the decision, finding that the alleged fraud or misrepresentation in the
execution of the Compromise Agreement lacks substantial evidence
- Hence this petition
ISSUE:
Are the compromise agreement and the subsequent deed of sale valid and legal?
HELD:
- The bilateral promise to sell between the Zambaleses and the Corporation, and the
subsequent deed of sale between Preysler and the latter were declared NULL AND
VOID
- While the Compromise Agreement was held to be in violation of the Public Land
Act, which prohibits alienation and encumbrance of a homestead lot within five
years from the issuance of the patent. Although the issue was not raised in the
Courts below, the Supreme Court has the authority to review matters even if they
are not assigned as errors in the appeal, if it is found that their consideration is
necessary in arriving at a just decision of the case.
- The Supreme Court sustained the finding of the appellate court that fraud and
misrepresentation did not vitiate petitioners' consent to the Agreement because
the latter were not as ignorant as they themselves tried to show. The Zambaleses
were political leaders who speak in the platform during political rallies, and the
lawyers they have hired belong to well-established law firms in Manila, which show
that although they were illiterate, they are still well-informed.
III. Contract of Sales vs Agency to Sell
4. Quiroga vs Parsons Hardware, 38 Phil 501
FACTS:
- January 24, 1911: Andres Quiroga and J. Parsons entered into a contract, wherein
Quiroga grants in favor of Parsons the exclusive rights to sell his beds in the
Visayan Islands under some conditions.
- One of the said conditions provided that Mr. Parsons may sell, or establish
branches of his agency for the sale of "Quiroga" beds in all the towns of the
Archipelago where there are no exclusive agents, and shall immediately report
such action to Mr. Quiroga for his approval while another one passed on to
Parsons the obligation to order by the dozen and in no other manner the beds from
Quiroga.
- Alleging that the Parsons was his agent for the sale of his beds in Iloilo, Quiroga
filed a complaint against the former for violating the certain obligations implied in
what he contended to be a contract of commercial agency:
o not to sell the beds at higher prices than those of the invoices; to have an
open establishment in Iloilo; itself to conduct the agency; to keep the beds
on public exhibition, and to pay for the advertisement expenses for the
same; and to order the beds by the dozen and in no other manner.
- (not mentioned in full-tect case) *Lower court declared it as a contract of sale*
ISSUE:
Is the defendant, by reason of the contract, a purchaser or an agent of the plaintiff for
the sale of the latters beds in Iloilo?
HELD: Contract of Purchase and Sales, not one of Agency
- The Supreme Court declared that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of
which is alleged as a cause of action are not imposed upon the defendant, either
by agreement or by law.

In the contract in question, what was essential, as constituting its cause and
subject matter, is that the plaintiff was to furnish the defendant with the beds
which the latter might order, at the price stipulated, and that the defendant was to
pay the price in the manner stipulated.
There was the obligation on the part of the plaintiff to supply the beds, and, on the
part of the defendant, to pay their price.
o These features exclude the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to sell it, and does not
pay its price, but delivers to the principal the price he obtains from the sale
of the thing to a third person, and if he does not succeed in selling it, he
returns it.

IV. Contract of Sale vs. Contract of a Piece of Work

5. CONCRETE AGGREGATES vs CTA, 185 SCRA 416
G.R.No.55793, May 18, 1990
Petitioner: Concrete Aggregates, Inc.
Respondents: Court of Tax Appeals and Commissioner of Internal Revenue
FACTS:
- Concrete Aggregates has an aggregate plant in Rizal which processes rock
aggregates mined by it from private lands, and
- It also maintains and operates a plant in Quezon City for the production of readymixed concrete and plant-mixed asphalt.
- 1968: the agents of the CIR conducted an investigation of petitioner's tax liabilities,
and assessed and demanded payment from petitioner a certain amount
(P244,002.76) as sales and ad valorem taxes for the first semester of 1968,
inclusive of surcharges.
- Instead of paying, the petitioner appealed to respondent CTA.
- CTA concluded that petitioner is a manufacturer subject to the 7% sales tax under
the Section Section 186 of the 1968 National Internal Revenue Code, and ordered it
to pay what the respondent CIR demands, plus interest at the rate of 14% per
centum from January 1, 1973 up to the date of full payment thereof pursuant to
Section 183 (now 193) of the same Code.
- Petitioner contends, however, that it is a CONTRACTOR (contract of a piece of
work) within the meaning of Section 191 under the same Code, that its business
falls under "other construction work contractors" or "other independent
contractors", and that it produced asphalt and concrete mix only upon previous
orders.
- Hence, this petition
- SC: First Division denied the petition for lack of merit
- SC: MOR denied
- SC: With leave of court, 2nd MOR was granted
ISSUE:
Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a
manufacturer subject to the 7% sales tax under Section 186?
HELD: Petitioner is a MANUFACTURER as defined by Section 194(x), now Section 187(x),
of the Tax Code, affirming CTAs decision
- Petitioner, as a manufacturer, not only manufactures the finished articles, but also
sells and distributes them to others.
- A contract for the sale of an article which the vendor, in the ordinary course of his
business manufactures or procures for the general market, whether the same is on
hand at the time or not is a contract for the sale of goods
- It reiterated the respondent CTAs finding that petitioner was formed and organized
primarily as a manufacturer; that it has an aggregate plant at Montalban, Rizal,
which processes rock aggregates mined by it from private lands; it operates a
concrete batching plant at Longos, Quezon City where the specified aggregates
from its plant at Montalban are mixed with sand and cement, after which water is

added and the concrete mixture is sold and delivered to customers; and at its plant
site at Longos, Quezon City, petitioner has also an asphalt mixing machinery where
bituminous asphalt mix is manufactured.
Petitioners marketing system would readily disclose that its products are available
for sale to anyone needing them.
The raw materials become a distinct class of merchandise or finished products for
the purpose of their sales or distribution to others and not for his own use or
consumption.

V. Perfection of a Contract of Sale

6. PEOPLES HOMESITE vs CA, 133 SCRA 777
G.R.No.L-61623, Dec 26, 1984
Petitioner-Appellant: Peoples Homesite & Housing Corp.
Respondents-Appellees: CA, Rizalino Mendoza, and Adelaida Mendoza
FACTS:
- February 1960: PHHC passed a resolution, subject to the approval of ity Council of
the PHHCs consolidation subdivision plan, awarding Lot 4 with located at Diliman,
Court City to spouses Mendoza at a price of P21.00 per square meter, subject to
the approval of the OEC(PHHC) Valuation Committee and higher authorities.
- August 1960: The City Council disapproved the consolidation subdivision plan
- February 1964: The City Council approved a revised version where Lot 4 was
reduced to an area of 2,608.7 square meters.
- October 1965: the PHHC withdrew the tentative award of Lot 4 from the spouses
Mendoza for the latters failure neither to pay its price nor to make a 20% initial
deposit
- Lot 4 was re-awarded jointly and in equal shares to Miguela Sto. Domingo, Enrique
Esteban, Virgilio Pinzon, Leonardo Redublo and Jose Fernandez, all of whom made
the initial deposit.
- The subdivision of Lot 4 into five lots was later approved by the Court council and
the Bureau of Lands.
- The spouses Mendoza asked for reconsideration and for the withdrawal of the said
2nd award to Sto. Domingo and four others
- Petitioner also filed an action for specific performance plus damages.
- The trial court sustained the award
- Court of Appeals reversed the said decision, declared void the re-awarding to Sto.
Domingo and four others, and ordered the PHHC to sell Lot 4 with an area of
2,608.7 square meters at P21.00 per square meter to spouses Mendoza.
ISSUE:
Was there a perfected sale of Lot 4, with its reduced area, between the parties?
HELD:
- The Supreme Court found that there was no perfected sale of Lot 4 because the
said lot was conditionally or contingently awarded to the Mendozas subject to
the approval by the Court council of the proposed consolidation subdivision plan
and the approval of the award by the valuation committee and higher authorities.
(no approval)
-

When the plan with the area of Lot 4 reduced to 2,608.7 square meters was
approved in 1964, the spouses Court should have manifested in writing their
acceptance of the award for the purchase of Lot 4 just to show that they were still
interested in its purchase although the area was reduced.

Article 1475 of the Civil Court says

[t]he contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance,
subject to the law governing the form of contracts.
There was a no meeting of the minds between the parties on the purchase of Lot 4
with an area of 2,608.7 square meters at P21 a square meter and the PHHC board
of directors acted within its rights in withdrawing the tentative award.
o

7. TOYOTA SHAW, INC. vs. CA, 244 SCRA 320

G.R.No.L-116650, May 23, 1995
Petitioner: Toyota Shaw, Inc.
Respondents: CA and LUNA SOSA
FACTS:
Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the
Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they
met Popong Bernardo who was a sales representative of said branch. Sosa emphasized
that he needed the car not later than June 17, 1989 because he, his family, and a
balikbayan guest would be using it on June 18 to go home to Marinduque where he will
celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for
pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr.
Sosa & Popong Bernardo of Toyota Shaw, Inc., a document which did not mention
anything about the full purchase price and the manner the installments were to be paid.
Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and
Bernardo accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which showed
Sosas full name and home address, that payment is by "installment," to be financed by
"B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces
provided for "Delivery Terms" were not filled-up.
When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa
asked that his down payment be refunded and petitioner Toyota issued also on June 17 a
Far East Bank check for the full amount of P100,000.00, the receipt of which was shown
by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice
to our future claims for damages." Petitioner Toyota contended that the B.A. Finance
disapproved Sosas the credit financing application and further alleged that a particular
unit had already been reserved and earmarked for Sosa but could not be released due to
the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa
the option to purchase the unit by paying the full purchase price in cash but Sosa
refused.
The trial court found that there was a valid perfected contract of sale between Sosa and
Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in
selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed
the said decision.
ISSUE:
Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?
COURT RULING:

The Supreme Court granted Toyotas petition and dismissed Sosas complaint for
damages because the document entitled Agreements Between Mr. Sosa & Popong
Bernardo of Toyota Shaw, Inc., was not a perfected contract of sale, but merely an
agreement between Mr. Sosa and Bernardo as private individuals and not between Mr.
Sosa and Toyota as parties to a contract.
There was no indication in the said document of any obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and neither was there a correlative
obligation on the part of the latter to pay therefor a price certain. The provision on the
downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only refer to a sale on installment basis, as VSP
No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right
in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause
any legally indemnifiable injury.

8. LIMKEKTAI SONS MILLING, INC. vs. CA, 225 SCRA 60

G.R.No.118509, Dec 1, 1995
Petitioner: Limkektai Sons Milling, Inc.
Respondents: CA, BPI and NBS
FACTS:
Philippine Remnants was the owner of a piece of land which it then entrusted to BPI.
Pedro Revilla was authorized by BPI to sell the lot for PHP1000/sqm. Revilla contacted
Alfonso Lim who agreed to buy the land. Alfonso Lim and Albino Limketkai went to BPI
and were entertained by VP Albano and Asst. VP Aromin. BPI set the price at 1,100 while
Limketkai haggled to 900. They subsequently agreed on Php1,000 on cash basis. Alfonso
Lim asked if it was possible to pay on terms and BPI officials said there was no harm in
trying to ask for payment in terms but if disapproved, the price would have to be paid in
cash. Limketkai paid the initial 10% with the remaining 90% to follow. Two or three days
later, Alfonso Lim found out that their offer had been frozen and then went to BPI to
tender full payment of 33M to Albano but was refused by both Albano & Bona.
Issue:
W/N there was a perfected contract of sale
Held:
1995 decision
> Perfection of the contract took place when Aromin and Albano, acting for BPI, agreed
to sell and Alfonso Lim & Albino Limketkai, agreed to buy the lot at Php1000/sqm. A
consensual contract is perfected upon mere meeting of the minds and although the deed
of sale had yet to be notarized, it does not mean that no contract was perfected.
1996 decision
> Consent is manifested by the meeting of the offer and acceptance upon the thing,
and the cause which are to constitute the contract. The offer must be certain and
aceptance absolute. Limketkais acceptance was qualified and therefore, was actually a
counter offer.